SkyPower fund revives Quebec wind farm plans after reaching agreement with government

Global Power Report August 31, 2006

SkyPower Wind Income Fund said August 24 it has revived plans for a 201-MW wind project in Riviere-du-Loup , Quebec, after the regional government there agreed to work toward reaching “a final resolution on the  turbine layout and related authorizations, approvals and rights-of-way.”

On July 21, the SkyPower fund, which Toronto-based SkyPower Corp. formed late last year to develop the Quebec project, canceled plans for the wind farm after failing to secure needed approval from the regional government. The fund said then that it had agreed to move the locations of more than 80 of the project’s 134 GE 1.5-MW wind turbines, but that that was “not enough” to satisfy the regional government (GPR, 27 July, 17).

The SkyPower fund said last week that the regional government has now agreed on the locations for the 26 turbines in the project’s first phase, and agreed to provide the “certificates of conformity” and other approvals for those turbines. It said it anticipates that the authorizations and certificates of conformity “will be received shortly. Further discussions are continuing … in respect of requirements for rights-of-way.” The fund said it has secured final provincial approval for the first six turbines, and expects to start installing them by the end of September. It expects to secure final provincial approval for the next 20 turbines “early in the fourth quarter of 2006,” and to complete their installation by the end of this year.

The SkyPower fund and the regional government said they would continue to work toward a final siting plan for the remaining 108 turbines, whose installation will start after the first 26 have been tested for a period of 120 days.

The fund recently closed on a $26C million ($123 million) “senior secured turbine supply loan” underwritten by HSH Nordbank AG that will be used to provide the balance of the progress payments due in 2006 under the fund’s turbine supply agreement. The loan is repayable on the earlier of December 31, 2006, or the closing on a senior secured construction and term debt facility the fund is working toward with HSH Nordbank.

The fund has entered into a non-binding term sheet with HSH Nordbank for an underwritten senior secured construction and term debt facility of up to about $300C million to fund the balance of the construction costs of the 201-MW project, and to repay the turbine-supply loan, the fund said.

“Due diligence, negotiation of definitive agreements and credit approval process are ongoing,” it said, adding that it “anticipates completing the construction and term debt facility early in the fourth quarter of 2006.” HSN Nordbank had acquired an unspecified minority interest in SkyPower Corp.

In November 2004, Hydro-Quebec and SkyPower signed a 21-year power purchase agreement  for the output of the $350C million wind project, which will generate an average of 633,000 MWh/year. Hydro-Quebec representatives, eager to see the project proceed, participated in a recent meeting between SkyPower and the regional government that resulted in the project’s revival, the fund said.

Copyright 2006 The McGraw-Hill Companies, Inc